- FTSE 100 up 36 points to 10,269
- Oil prices jump 5% after Iran counter-offer rejected by Pres Trump
- Bond market eyes speech from PM Starmer
5.15pm: London stocks gain
It was a positive day for the FTSE 100, which added 36 points to close at 10,269 as investors remained positive despite the ongoing US-Iran conflict.
“Trump’s rejection of Iran’s demands sets up the potential for another round of conflict in the region, but it seems nothing can shake investors from their conviction that a deal will be done at some point,” IG chief market analyst Chris Beauchamp said.
“Oil prices have eased off the overnight highs, and while the Vix is higher, it remains within spitting distance of the recent lows – no one seems to have decided to panic just yet.”
4.18pm: Footsie outperforming
London's blue-chip index is the only one in Europe in green, though US stocks have fought their way into green, led by the tech giants of the Nasdaq.
For the Footsie, Airtel remains top of the leaderboard, up almost 16%.
IAG is next, up 5.9% after the owner of British Airways announced an offer to repurchase its outstanding 2028 convertible bond, a move that would meaningfully reduce its diluted share count.
Precious and base metals miners are also key in separating the index from its Continental cousins, as silver prices have jumped 6%, with gold up less than 0.5% and copper up over 3%.
The UK index is outperforming despite gilt yields continuing to edge ever higher, as Westminster cat-calls for Keir Starmer to step down continuing.
3.40pm: A new AIM trading company
A new company is trading on London's junior market today.
Dotlines Global, a technology group spanning telecommunications, digital infrastructure, cybersecurity and financial technology, has begun trading on AIM following the completion of a reverse takeover into Ikigai Ventures that valued the business at £55.7 million.
The deal was agreed last summer and today Malaysia-focused Dotlines has begun trading under the ticker DOTL, with 609.3 million shares in issue giving a market capitalisation of £57.9 million at the acquisition price of 9.5p.
The deal was structured as a reverse takeover by Ikigai, a special purpose acquisition company that had previously traded on the London Main Market.
2.51pm: FTSE on the rise, Wall Street flat
The FTSE 100 has got a new lease of life in the past hour, having flirted with a drop into the red in the previous hour.
Airtel Africa is the biggest riser, up 17% after parent Bharti said it planned to buy more shares.
IAG, Fresnillo and Endeavour Mining are next, ip 4-6%. Copper and base metals miners are next, with Antofagasta, Anglo American and Rio Tinto up 3.7-2.9%.
US stocks opened little changed, with the main three indices hovering either side of the flat line.
1.39pm: Laws to be changed to allow British Steel nationalisation
British Steel will be nationalised, Downing Street has announced, with new legislation to be announced in the King's Speech on Wednesday to give the government the option to bring the company into public ownership.
The Department for Business and Trade noted that it would come back into public hands for the first time since being sold off in 1988.
"The new powers would be subject to public interest tests, and if used to nationalise British Steel, they would boost national security while giving stability to workers at Scunthorpe, and British Steel’s suppliers and customers."
In April last year, government officials took control of the company, though it continued to be owned by China's Jingye.
"Since then, the government has been in discussions with British Steel’s owner to find a pragmatic and realistic solution for the business on acceptable terms," the statement said.
"It has not been possible to agree a commercial sale with the current owner, and government does not believe an agreement could be reached which would deliver acceptable value for money for taxpayers.
"The government believes introducing legislation to provide a route to public ownership is the appropriate next step, while recognising that any decision to use the powers in the Bill would be subject to the Bill’s public interest test being met."
In a separate statement, the GMB union said it has been "long known [that] Jingye will not negotiate in good faith".
General secretary Charlotte Brumpton-Childs says the legislation "will cover the whole steel industry - it isn’t specifically for British Steel but it is what will protect it from foreign owners".
1.03pm: Flat start expected for Wall Street
Wall Street looks set for a muted open to the week, with Dow Jones futures down 0.1%, while S&P 500 and Nasdaq futures are even flatter.
US equities ended last week strongly, extending a powerful technology-led rally. The S&P 500 climbed 2.3% over the week while the Nasdaq Composite jumped 4.4%, marking a sixth successive week of gains for both indices. Semiconductor shares continued to dominate, with Micron Technology and AMD both up more than 130% since the end of March, while Intel has rallied 215% over the same period.
Corporate earnings have also continued to support sentiment. According to FactSet, 89% of S&P 500 companies have now reported results, with 84% beating earnings forecasts and 80% topping revenue expectations. Year-on-year earnings growth is tracking just below 28%, which would mark the strongest pace since the rebound from pandemic shutdowns in late 2021.
Looking ahead, the key US data this week is inflation, with both CPI and PPI reports due this week, alongside earnings from the likes of Simon Property, Oklo, Cisco, Tencent, Alibaba and Under Armour.
Bitcoin neared its highest level since 1 January overnight, "which coincided with President Trump’s rejection of Iran’s response to the US peace proposal", says David Morrison, market analyst at Trade Nation.
"After a relatively steady weekend session which saw it nudge upwards while establishing itself above $80,000, it suddenly dropped to $80,250 before jumping above $82,000. It subsequently gave back most of these gains but was holding above $80,500 as the European session progressed."
Last Wednesday afternoon, Bitcoin briefly topped $82,850 for an overall gain of 27% since the end of March.
"Some profit-taking emerged which pushed it back below $80,000. But it didn’t stay down there for long, and it seems to be holding $80,000 as support," says Morrison.
12.30pm: E.ON to become UK no 1
German energy giant E.ON has announced the acquisition of smaller UK rival Ovo, which seems designed to expand its scale and accelerate its product innovation as electrification and flexible time-of-use tariffs increase.
With E.ON currently having around 5.6 million UK customers and Ovo roughly 4 million, the deal would propel the Essen-headquartered group from second place to become Britain's largest gas and electricity supplier.
For customers of both companies, there will be no changes while regulators review the deal, with existing tariffs to be honoured in full.
E.ON's UK CEO, Chris Norbury, said the UK energy system has been focused on upstream production, but with the increasing adoption of solar panels, batteries and EV charging, there is a shift underway built around new flexible tariffs such as those designed to reward customers for shifting energy use to cheaper, off-peak periods.
"Together, these turn homes into active participants in the energy system. Every kWh shifted, stored or self-generated is value that would otherwise have been captured somewhere else in the chain. Scale amplifies the benefit - for individual customers and for the system as a whole," he says.
He says Ovo was chosen as it is "a modern digitally native business" so it is "not about scale for its own sake. It is about building a retailer with the capability, the technology and the customer base to make new energy work for everyone".
E.ON will continue to use Ovo's existing energy intelligence platform licence agreement with Kaluza, which aims to simplify energy billing, reduce costs and enables faster product innovation, and evaluate the potential adoption of the platform across the wider E.ON group outside of the UK.
11.31am: Sideways
The FTSE has just been going sideways after the first half hour this morning.
Keir Starmer has been taking questions since his speech, which went pretty much according to the pre-released quotes earlier (see below).
Essentially, he says he will stay in the role as he does not want the "chaos" of constantly changing leaders, and we should see some of the "bigger response" from the government in the King’s speech.
Since then, over 30 Labour MPs have said the speech has not moved the dial and they're calling for the PM to set a timetable for his departure.
The bond marjet was watching, and while gilt yields climbed during the speech, they have dropped back to roughly where they were at the start of the day.
10.47am: Oil and gas tankers
Oil prices have eased a little.
There are reports that Qatar-owned liquefied natural gas (ILNG) tankers are nearing the mouth of the Strait of Hormuz.
"If it successfully traverses the Strait, this would be the second successful Qatar tanker to traverse the Strait in 10 weeks," says Kathleen Brooks, head of research at XTB
"While this is a tiny fraction of the number of Qatari ships that usually pass through the Strait, it is a step in the right direction and could suggest that tensions in the Gulf are easing, even if Iran and the US are still haggling over the terms of a peace deal.
"The Brent crude price is still above $100 per barrel and is currently trading just below $104 per barrel. The oil market remains in backwardation, which suggests that the market is holding out hope for a resolution of this conflict, even though the peace process is dragging on, and the conflict is entering its 10th week."
With the price of oil remaining highly reactive to news around the reopening of the Strait of Hormuz, Brooks says signs that even a trickle of tankers getting through "could weigh on the oil price in the coming days".
Bond yields are higher across the board at the start of the week, she adds, with US yields also rising, as rate cuts from the Fed are priced out on the back of stronger non-farm payrolls report from the end of last week.
The gilt market "is not an outlier today", she points out, with UK yields marginally higher than elsewhere, remaining "nominally higher than elsewhere in the G7, even though our debt to GDP ratio remains lower than the US, France and Italy".
9.57am: Bonds in focus as Starmer gives speech
UK gilt yields, ie government borrowing costs, have risen this morning ahead of a big speech from under-pressure Prime Minister Sir Keir Starmer in a few minutes.
This follows days of mounting calls from many Labour MPs for the PM to announce that he will step down, along with other speculation about his position.
UK 10-year bond yields climbed to 4.975% earlier, with the 2yr to 4.45% and 30yr to above 5.65%, though in the past hour there has been a softening across the board. Note that gilt yields rise when demand and prices fall.
A rise in gilt yields indicates "that bond investors are uneasy about the political backdrop", says Russ Mould, investment director at AJ Bell.
"Starmer’s big speech could be make or break for his position at the top, and the bond market’s negative reaction implies a sense of unease.
“Bond investors are selling gilts as they now consider the UK government to be a riskier proposition."
Reports suggest clamouring potential for a leadership challenge, following Labour’s awful performance in last week’s local government elections, with health secretary Wes Streeting, Manchester mayor Andy Burnham and former deputy leader Angela Rayner seen to be front-runners.
"Bond investors have already been worried by the prospect of higher inflation linked to the Middle East conflict, and now they’re starting to squirm in their seat at the idea we might get a different prime minister and chancellor driving an agenda of increased borrowing and spending," says Mould.
He acknowledges that another setback to the Middle East peace negotiations also lifted bond yields for most major economies.
9.32am:
Keir Starmer's speech at 10am this morning will confirm that he wants to strengthen ties with the EU, according to extracts released in advance to newspapers.
And he will also say that "incremental change won’t cut it" and that "a bigger response" will be needed on growth, defence, Europe, energy than Labour anticipated when it won the 2024 general election, "because these are not ordinary times".
Starmer will say: "This Labour government will be defined by rebuilding our relationship and by putting Britain at the heart of Europe. So that we are stronger on the economy, on trade, on defence, you name it.
"Because standing shoulder to shoulder with the countries that most share our interests, our values and our enemies – that is the right choice for Britain, that is the Labour choice."
9.14am: FTSE staying above water, jobs reports offer 'telling' readings
After just over an hour, the FTSE 100 is up 28 points or almsot 0.3% and the FTSE 250 is down 22 points or 0.1%.
Mainland European stock markets are mostly in the red, with Germany's DAX down 0.2% and France's CAC 0.8% lower but Spain's IBEX marginally in the green.
There have been a couple of UK reports and data out this morning.
One, from the ITEM Club, forecasts up to 163,000 jobs will be lost across the country this year as unemployment declines by 0.4%, with lower-income areas to be hardest hit due to the economic impact of the war in the Middle East.
The report predicts a pullback in consumer spending amid soaring costs of energy, shipping and various commodities.
The REC report on jobs showed a fall in the permanent staff placements index to 47.5 in April, from 49.2 in March, while the measure of permanent staff availability also dropped.
Pay growth has been broadly stable in recent months, REC said, though the permanent staff salaries index rose to 52.3 in April from 51.1 the month before.
Heathrow airport, meanwhile, reported a 5.3% drop in passenger numbers last month, with the blame firmly placed on the Iran war.
Some 6.7 million passengers passed through the west London hub, down from 7.1 million last year.
Earlier, China’s consumer price inflation defied market expectations and rose to 1.2% in April, up from 1.0% in March. The consensus forecast was 0.9%.
This was mainly driven by higher energy inflation of 2.7%, up from 1.5% in March, partially offset by a renewed fall in food inflation, while core inflation remained broadly unchanged.
Anna Macdonald, investment strategy director at Hargreaves Lansdown notes that the ITEM Club report "points to weakness in manufacturing and construction, sectors squeezed by higher energy costs".
"This chimes with what housebuilders have been saying, several of whom have flagged margin pressure from higher input costs, as well as planning delays and affordability constraints, which are weighing on volumes," she says.
Reading the runes from the REC survey, she says the move from more businesses opting for temporary rather than permanent hires "is a telling signal".
"When companies are uncertain about the outlook, they avoid locking in fixed employment costs. It does not necessarily point to rising unemployment in the near term, but it does suggest that business confidence is weakening."
8.50am: Victrex slides after messy results
Victrex is the biggest faller on the FTSE 350, down 7% after the polymer maker reported lower interim profits, a statutory loss and said it was cutting around 10% of jobs around the business.
Underlying profit before tax for the FTSE 250 group fell 18% to £19 million in the six months to March, as stronger sales volumes were offset by pricing pressure, product mix and currency movements.
Victrex posted a reported pre-tax loss of £44 million after exceptional charges of £63 million, largely reflecting a £61 million non-cash impairment linked to its manufacturing facility in China.
Analyst Vanessa Jeffriess at Jefferies said lowered guidance and the China impairment are "unlikely to come as major surprises, but are clearly unhelpful".
8.32am: Compass results seen as solid
On Compass, analyst Simon Lechipre at Jefferies said the results came with a "slight beat" to the City consensus forecast, despite some softer metrics.
"Importantly, new wins momentum remains strong (...) and the company is confident in net new accelerating in 2H."
The upgrade to full-year profit growth reflects better margin progression, he says.
"We think results are solid across the board, and should be taken well on the back of cautious expectations."
8.15am: FTSE 100 opens higher, with Compass setting direction
The FTSE 100 has opened up 33 points at 10,266.
Compass is setting the direction, up 5.1% after its interim results.
Oil majors Shell and BP are providing some power, as Brent crude prices vaulted back to almost $105 a barrel overnight.
British Airways owner IAG is up 4.3%, bouncing back from losses on the back of results at the end of last week.
Others near the top of the early risers include British American Tobacco, RELX, Anglo American and GSK.
Down the bottom are a group of housebuilders, led by Barratt Redrow and Persimmon, down 1.6-1.3%.
JD Sports is the biggest faller, down 2.7%, while defence contractor Babcock International is dowen 1.5%.
7.55am: Compass serves up improved outlook
Compass Group has raised its full-year profit guidance after reporting double-digit growth in the first half, helped by strong contract wins and improving margins.
Underlying operating profit for the FTSE 100 catering giant increased 12% to $1.84 billion in the six months to March, as revenue swelled 9% to $25 billion.
There was a 13% increase in the interim dividend and the company said it now expects underlying operating profit growth of above 11% for the full year, up from previous guidance of around 10%.
7.27am: What's in store for this week
This week's FTSE 350 results include Compass and Victrex today, then things pick up from tomorrow.
Tuesday sees Bytes Technology Group, Derwent London, Greggs, IMI, Imperial Brands, Vodafone and Wickes Group; then Wednesday has Avon Technologies, Spirax Group, TP ICAP Group and TUI.
Thursday brings 3i Group, Burberry Group, Grainger, ITV, Land Securities Group, National Grid, Premier Foods, Princes Group, Shawbrook Group, Vesuvius and Watches of Switzerland Group, with Friday having just Grafton Group in the diary.
Attention will also shift to US and European inflation figures, says market analyst Ipek Ozkardeskaya at Swissquote, with a UK focus on GDP.
"While European inflation is expected to confirm heating price pressures in April due to higher energy prices – likely coupled with softer growth readings – expectations for US CPI are rather balanced.
"According to estimates, US headline inflation may have even slowed on a monthly basis in April. On a yearly basis, however, we could see a rise from 3.3% to 3.7%.
"That’s because the Iran war-related jump had already started creeping into last month’s inflation figures, making the monthly figure look less threatening than the yearly one.
"But inflation within the 3–4% range remains well above the Fed’s 2% target – let’s remember that – and will continue to keep Fed hawks alert."
7.17am: London market pre-open
The FTSE 100 has been called higher at the start of the week, while other European benchmarks are seen opening lower, as oil prices jumped 5% after the US and Iran failed to come to a peace agreement.
London's blue-chip index is up 23 points on the futures markets, after losing almost 144 points last week to close at 10,233.07.
Futures for Frankfurt, Paris and New York are all slightly in the red, while stocks in Asia are mixed, with the Mumbai and Tokyo benchmarks down 1.2% and 0.4% but the Shanghai counterpart up 0.9% and Seoul's Kospi jumping 4.5%.
It comes after Iran's response to the US proposal to end the war was branded "totally unacceptable" by Donald Trump.
Iran’s counter-offer called for an end to the war on all fronts and the lifting of sanctions on Tehran, according to the semi-official Tasnim news agency, along with war reparations, full sovereignty over the Strait of Hormuz and the release of frozen assets.
Trump is due to visit China later this week and meet President Xi Jinping.